Demand for Renewable Power May Exceed Supply

For years, renewable power industries, such as solar and wind, have struggled to become competitive with traditional sources of power. Higher costs of production and lower demand have made it difficult for them to penetrate the nation’s energy markets. Government support in the form of tax credits and so-called renewable energy standards have helped to spur investment and increase demand.

Now that trend appears to be entering into a new phase.

A study by the National Renewable Energy Laboratory (NREL) projects the gap between demand and supply for renewable power will widen significantly by the year 2010. According to the study, U.S. green power sales totaled 8.5 million mega-watt-hours (MWh) in 2005 and approximately 12 million MWh in 2006. The latter represents a three-fold increase from just three years before. That growth has been spurred by a number of factors. So-called voluntary markets, in which customers voluntarily choose to purchase green power, have grown steadily in recent years; these markets are expected to increase at an annual rate of 35 percent through 2010.

New generating capacity for power from renewable sources could easily meet and exceed the growth in voluntary demand, however, government polices have driven up demand even further, to the point that supplies are not expected to keep pace. For example, the U.S. Environmental Protection Agency’s Green Power Partnership, which encourages universities and large companies to increase their green power purchases, has contributed to an 18-fold increase in commercial green power sales in five years.

According to the report, the greatest boost has come from state governments. More than two dozen states have enacted re-newable portfolio standards, which require that a minimum percentage of total electricity supply comes renewable power over a number of years. These policies have contributed to an even greater surge in demand, which when combined with the upward trend in voluntary markets, could lead to a demand-supply imbalance of as much as 30 million MWh by the year 2010.

Even in a best-case scenario for maximum growth in wind power, the NREL projects an imbalance of close to 10 mil-lion MWh by 2010. EC